Shares of Apple Inc. resumed their downward trajectory on Friday, ending the week at US$533.25, off by $13.995 (-2.56 percent), on strong volume of 28.1 million shares. That's an 8.5 percent loss on the week, and the stock has officially passed the so-called “death cross.”
$AAPL Chart for December 7th, 2012
Source: Yahoo! Finance
The bears have been having a field day with the stock, though the losses appear to have nothing to do with Apple's fundamentals. Worries about China Mobile, some margin rules changes with a minor clearing house, and selling due to likely tax law changes in the near future have all weighed the stock down. On Friday, Apple revealed that its new 27-inch iMacs won't ship until January, after the Christmas buying season.
Also on Friday, $AAPL passed the death cross, a technical trading term for a point when a stock's 200 day moving average drops below its 50 day moving average. This is often indicative of bear trend, especially when accompanied by high volume, and all manner of talking heads and pundits are discussing the import of $AAPL having passed a death cross.
One analyst, however, called shenanigans on this issues. Collin Monsarrat of Birinyi Associates told The Wall Street Journal that $AAPL has crossed no fewer than five death crosses since November of 2000, a period of time when , points out Apple shares have suffered through five death crosses dating back to November 2000.
Over that period of time, shares of Apple have increased by roughly 5,800 percent, suggesting that death crosses have not carried the same meaning for Apple that it has for other stocks.
“The data is fairly inconclusive, but if it shows anything, it is that a death cross implies better performance,” Mr. Monsarrant said. “The stock has tended to struggle for the week and month following the cross, but three months later the stock has tended to be not only up but outperform the S&P 500 60% of the time.”
So death cross, smeath cross. The reality is that Apple's stock is simply volatile. Many of its dramatic rises have been predicated on little or no news, just as many of its dramatic declines have been predicated on little or no news.
The stock is currently under the influence of several intangibles that have little or nothing to do with the company's fundamentals. Once the market works through those and Apple reports December quarter results and offers guidance for the January quarter, those fundamentals should reassert themselves, one way or another.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.